5 Alternatives to Short-Term Loans

When faced with an urgent need for funds, many women turn to short-term loans. However, these loans often come with high interest rates and can become difficult to repay, also it adds up to the financial burden on us. Instead, there are short-term loan alternatives that offer flexibility and low interest rates, allowing women to manage money without the stress of heavy debt. 

Let’s dive into 5 alternatives to short-term loans that can help you fulfill your urgent money needs.

1. Utilise Emergency Fund:

One of the critical goals of every woman is an emergency fund because, we may encounter unexpected situations like sudden job loss, career breaks, unplanned pregnancy, or a partner’s death, which can be both emotionally and financially stressful. An Emergency Fund ensures that we are financially prepared to handle these situations without compromising our long-term savings or relying on loans/debts which can be used anytime. Moreover, using emergency fund won’t add any financial burden and you sail your money urgency easily.

If you haven’t created an emergency fund for yourself then build with Lxme’s Emergency Fund.

2. Borrowing from Family or Friends:

If you require urgent need of money you can borrow from family or friends who can provide interest-free or low-interest financial help. However, when you borrow money from your friends & family even if it’s a simple and quick option, always ensure you repay on time to maintain trust so that you don’t end up ruining your relations.

3. Use Credit Card:

If you have a credit card then during such urgent needs it can help you with immediate money access. Many cards offer an interest-free period if you repay within the due date, making it a useful alternative to loans. While using credit cards make sure to repay money on time otherwise high interest rate will be applicable, therefore, it’s very important to pay it within the interest-free time period

4. Salary Advances

If you’re employed, you can ask for a salary advance from your employer. Salary advances allow employees to borrow a portion of their upcoming salary before payday. This can be a quick solution for urgent financial needs without needing to borrow from bank. However, since it is deducted from the next salary, the borrower must be prepared for a reduced salary during the next salary cycle. 

5. Loan Against Fixed Deposits (FD)

In India, most of the women have their money kept in Fixed deposits and with a Loan Against Fixed Deposits, you can borrow up to 90% (which might vary bank to bank) of your FD value without breaking it. This is a quick option, allowing you to continue earning interest on your deposit while meeting your urgent cash needs.

These are a few alternatives to short-term loans, which can help women access funds without taking on the financial burden of high-interest short-term loans. It’s important to consider these alternatives to make informed, financially empowering decisions.

Moreover, make sure to create an emergency fund for yourself in case you don’t have to avoid such situations and add up the burden of loans. Ideally, one should have an emergency fund that could cover 6-8 months of your expenses.

You can start building your emergency fund with Lxme’s well-researched, tax efficient & expert-curated emergency fund.

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